This training material is the property of the International Monetary Fund and is intended for use in IMF Institute for Capacity Development courses. Any reuse requires the permission of the IMF. The views expressed in this material are those of the course staff and do not necessarily represent those of the IMF or IMF policy. 1 Interrelations among Macroeconomic Accounts Macroeconomic statistics cover either: the whole economy (example : National Accounts) INTRODUCTION INTRODUCTION or a large and well-defined part of it (example : Government Finance Statistics) Accounting relationships link the various accounts to f h td t t form a coherent data system Interrelated economic variables are measured by means of a statistical system Interrelated economic variables are measured by means of a statistical system
57
Embed
Interrelations among Macroeconomic Accounts · INTERRELATIONS BETWEEN THE BOP AND DOMESTIC SECTORS ANALYZED FROM A POLICY PERSPECTIVE Income-Absorption Gap Saving-Investment Gap Monetary
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
This training material is the property of the International Monetary Fund and is intended for use in IMF Institute for Capacity Development courses. Any reuse requires the permission of the IMF. The views expressed in this material are those of the course staff and do not necessarily represent those of the IMF or IMF policy. 1
Interrelations among Macroeconomic Accounts
Macroeconomic statistics cover either:
the whole economy (example : National Accounts)
INTRODUCTIONINTRODUCTION
or a large and well-defined part of it (example :
Government Finance Statistics)
Accounting relationships link the various accounts to
f h t d t tform a coherent data system
Interrelated economic variables are measured by means of a statistical system
Interrelated economic variables are measured by means of a statistical system
2
Aggregate Economy
(“Real Sector”)General Government
INTRODUCTIONINTRODUCTION
f h ld i i
Four major components of the system of
Macroeconomic Accounts
Rest of the World
(“External Sector”)
Depository Corporations
(“Monetary Sector”)
VE
S Why put together data from these four accounts?
To build a coherent picture of a
JEC
TI To build a coherent picture of a
country’s economy (the “macroeconomic framework”) that can be used for:
analysis and policy prescriptions
OB
J scenario building assessing the macroeconomic impact of a hypothetical shock to the economy
3
NE
Introduction to Flow of
Funds Tables
Introduction to Flow of
Funds TablesIntroductionIntroduction
Saving-Saving-
Income-Absorption
Gap
Income-Absorption
Gap
DataDataU
TLI
N
Accounting Links
Accounting Links
Saving-Investment
Gap
Saving-Investment
Gap
Foreign SavingsForeign Savings
Behavioral ConsistencyBehavioral
Consistency
Data Consistency
Checks
Data Consistency
Checks
Key Accounts
Key Accounts
OU
Need for Data
Consistency
Need for Data
Consistency
gg
Monetary Approach
to the BOP
Monetary Approach
to the BOP
ConsistencyConsistency
Reconciling DataReconciling Data
4
Economic agents engage in transactions in the
markets for goods and services, factors of
KEY ACCOUNTSKEY ACCOUNTS
g ,
production, and financial assets
Macroeconomic accounts are linked because agents in the various sectors transact with one another
Macroeconomic accounts are linked because agents in the various sectors transact with one another
Y = C + I + (X – M)KEY ACCOUNTSKEY ACCOUNTS
Y M C I X
Cp Ipp p
Cg IgThe GDP identity linking aggregate supply and demand
for goods and services illustrates thisThe GDP identity linking aggregate supply and demand
for goods and services illustrates this
5
Numerical example
Y + M = Cp + Cg + Ip + Ig + X
KEY ACCOUNTSKEY ACCOUNTS
Y + M Cp + Cg + Ip + Ig + X
Let us assume government expenditures increase.What would be the potential impact on the other
sectors?
Let us assume government expenditures increase.What would be the potential impact on the other
sectors?
Linkages among the various economic aggregates are ofLinkages among the various economic aggregates are of
KEY ACCOUNTSKEY ACCOUNTS
Linkages among the various economic aggregates are of two types : accounting links and behavioral relationshipsLinkages among the various economic aggregates are of two types : accounting links and behavioral relationships
A ti li k i t ti i t t th l iA ti li k i t ti i t t th l iAccounting links give a starting point to the analysis
Behavioral relations show what factors precisely determine economic transactions between sectors
Accounting links give a starting point to the analysis
Behavioral relations show what factors precisely determine economic transactions between sectors
6
REAL SECTOR
GDP by expenditures, from National Accounts (SNA2008, domestic currency, transactions)
Private consumption
KEY ACCOUNTSKEY ACCOUNTS
p
Final government consumption
Private investment
Government investment
Exports of goods and nonfactor services
Imports of goods and nonfactor services
Gross Domestic Product
Balance of Payments (BPM06, US dollars, transactions) Current account (surplus +, deficit -)
Exports of goods and services
Imports of goods and services
Primary income (net)
KEY ACCOUNTSKEY ACCOUNTS EXTERNAL SECTOR
Secondary Income (net)
Official
Private
Capital account (surplus +, deficit -)
Financial account (net lending +,net borrowing -)
Direct investment
Portfolio Investments
Financial derivatives a.o.
Other investments
Net errors and omissions
Overall BOP balance (surplus +, deficit -)
Change in reserve assets (increase +, reduction -)
External financingNet domestic assetsNet claims on government
…
Link 5: Depository corporations survey and the fiscal accounts
External financing
12
Link 6A Broader View of linkages ofthe consolidated Depository Corporations Survey (domestic
currency, implied flows)
Two behavioral relationships
Net Foreign Assets
PlusPlus
Net Domestic Assets
ACCOUNTING LINKSACCOUNTING LINKS
Two behavioral relationships
Change in the stock of claims on nongovernment must be related with developments in the real sector
Net Domestic Assets Net Domestic Credit
Net claims on government
Claims on nongovernment
Claims on Public Enterprises
Claims on Private Sector sector
Broad money growth must be consistent with developments in the demand for money
Claims on Private Sector
Other Items Net
EqualsEquals
Broad Money
A
C
C
O
U
A
C
C
O
U
REAL SECTORFrom National Accounts (domestic currency, transactions)Private consumptionFinal government consumption
Private investmentGovernment investment
E t f d d f t i
GENERAL GOVERNMENTFiscal Accounts (GFSM2001, domestic currency, transactions)RevenueGrantsExpense
Interest paymentsOperating balanceTransactions in nonfinancial assets
Net lending/borrowingDomestic financing (net)
Interrelations Among Macroeconomic Accounts
N
T
I
N
G
N
T
I
N
G
Exports of goods and nonfactor servicesImports of goods and nonfactor services
Balance of Payments (BPM06,US dollars, transactions) Current account
Exports of goods and services
Imports of goods and services
Primary income (net)
Secondary Income (net)
Official
Private
Banking systemNonbanking sector
External financing (net)
Central Bank (domestic currency, implied flows)
Net foreign assetsNet domestic assets:
Net claims on government Claims on other depository corporationsOther items (net)
Monetary baseCurrency
MONETARY SECTOR
EXTERNAL SECTOR
L
I
N
K
S
L
I
N
K
S
Private
Capital and financial account
Direct investment
Portfolio Investments
Financial derivatives
Other investments
Errors and omissions
Overall BOP balance
Change in reserve assets
CurrencyBanks reserves
Other Depository Corporations(domestic currency, implied flows)
Net foreign assetsBanks' reservesNet domestic assets:
Net claims on government Claims on nongovernment Other items (net)
Liabilities to central bankPrivate sector deposits
13
An animated version of the previous slide
showing the main accounting links is
ACCOUNTING LINKSACCOUNTING LINKS
showing the main accounting links is
available
Go retrieve it and run it!Go retrieve it and run it!
Data ConsistencyData Consistency
14
What do we mean by accounting consistency ?
THE NEED FOR DATA CONSISTENCYTHE NEED FOR DATA CONSISTENCY
A macro framework is consistent when the different accounts reflect the transactions among
the sectors in the same way
A macro framework is consistent when the different accounts reflect the transactions among
the sectors in the same waythe sectors in the same waythe sectors in the same way
Same concepts for Allow to: Link major
Same Concepts Allow Linking
THE NEED FOR DATA CONSISTENCYTHE NEED FOR DATA CONSISTENCY
Sectors
Instruments
Link major macroeconomic statistics
Fill data gaps in related macroeconomic statistics
Recording rules Get early data from other datasets
15
Manuals of statistical methodology aim at ensuring consistent methods
Main Manuals
System of National Account (SNA 2008)
Balance of Payments Manual 6th edition
THE NEED FOR DATA CONSISTENCYTHE NEED FOR DATA CONSISTENCY
Balance of Payments Manual, 6th edition (BPM6) (2008)
Monetary and Financial Statistics Manual (MFSM) (2000)
Manual on Government Finance Statistics (GFSM2001): currently being harmonized with the 2008 SNA
16
In some cases, discrepancies in historical data across
sectors may be traced to identified factors, such as
THE NEED FOR DATA CONSISTENCYTHE NEED FOR DATA CONSISTENCY
differences in the timing of recording
different coverage of sectors
use of different values of exchange ratesg
As a matter of fact, inconsistencies in data that are reported to the IMF exist for most countriesAs a matter of fact, inconsistencies in data that are reported to the IMF exist for most countries
What can be done about this?
If we can identify the origin of a discrepancy, then as
THE NEED FOR DATA CONSISTENCYTHE NEED FOR DATA CONSISTENCY
If we can identify the origin of a discrepancy, then as
a second-best solution we can try to make ad-hoc
adjustments to the original data
If there is no valid explanation for apparent
inconsistencies there may be errors in the datainconsistencies, there may be errors in the data
Errors in the data should be correctedErrors in the data should be corrected
17
PNeed for Data Consistency
Accounts need to be consistent, i.e. transactions are reflected in the same way
In practice there are many possible sources of R
EC
AP
discrepancies
Solutions?
Try to explain the discrepancy
Unexplained discrepancies may reflect data errors and should be corrected
S i h ld b i t tR Scenarios should be consistent
Economic consistency
Not enough for scenarios to be consistent. Specify the behavioral relations among aggregates. This will become clearer in the last video
INTERRELATIONS BETWEEN THE BOP AND DOMESTIC SECTORSANALYZED FROM A POLICY PERSPECTIVE
INTERRELATIONS BETWEEN THE BOP AND DOMESTIC SECTORSANALYZED FROM A POLICY PERSPECTIVE
Income-Absorption GapIncome-Absorption Gap
Saving-Investment GapSaving-Investment Gap
Monetary Approach to the BOPMonetary Approach to the BOP
Foreign SavingsForeign Savings
Monetary Approach to the BOPMonetary Approach to the BOP
The underlying themes of these four approaches arethe sustainability of the country’s external position and the evolution of its reserve assets
The underlying themes of these four approaches arethe sustainability of the country’s external position and the evolution of its reserve assets
18
Absorption, Savings and the Current Account
There are various analytical ways to look at the
relationship between the current account and
THE INCOME-ABSORPTION GAPTHE INCOME-ABSORPTION GAP
p
domestic aggregates
Here we look at the absorption approach to the balance of payments
Here we look at the absorption approach to the balance of payments
19
Let’s do the simple math primary income (net)secondary income (net)
THE INCOME-ABSORPTION GAPTHE INCOME-ABSORPTION GAP
GNDIY Yf TRf
Y = C + I + (X–M)
GNDI A + (X M + Y + TR )GNDI = A + (X– M + Yf + TRf)
GNDI – A = CABA current account deficit is associated with an excess of absorption over disposable income
GNDI – A = CABA current account deficit is associated with an excess of absorption over disposable income
INDONESIA: Income-absorption gap (in current prices)
2000 2001 2002
As percent of GDP
If disposable income exceeds domestic demand the current account must show a surplus
Imports of goods and nonfactor services -34 -32 -27Imports of goods and nonfactor services -34 -32 -27
Net factor income -9 -8 -6
Net transfers 1 1 1
Gross national disposable income 92 93 95
Current account balance 5 4 5
20
Let us suppose that a country experienced a near-
zero current account balance for an extended
period of time. Suddenly the current balance turns
THE INCOME-ABSORPTION GAPTHE INCOME-ABSORPTION GAP
period of time. Suddenly the current balance turns
into a large deficit
What drives the change?
The identity does not indicate the direction of causality. Analysis is needed
The identity does not indicate the direction of causality. Analysis is needed
The shift could among other possibilities be:
• the result of a substantial exogenous rise in the
price of imports with the volume of imports
THE INCOME-ABSORPTION GAPTHE INCOME-ABSORPTION GAP
price of imports with the volume of imports
unaffected
• the result of an endogenous consumption boom
fueling an increase in the volume of imports
Whatever the underlying cause is, the identity holds and is useful in framing the analysis
Whatever the underlying cause is, the identity holds and is useful in framing the analysis
21
Contracting consumption or investment to reduce absorption Contracting consumption or investment to reduce absorption
In the Case of a Current Account Deficit:
THE INCOME-ABSORPTION GAPTHE INCOME-ABSORPTION GAP
Tightening monetary and fiscal policies to achieve thisTightening monetary and fiscal policies to achieve this
What about Raising Output and Income?
In the short term exchange rate depreciation can helpIn the short term exchange rate depreciation can help
In the medium term, higher investment and adequate structural reforms can raise outputIn the medium term, higher investment and adequate structural reforms can raise output
Policy options?Policy options?
Let us rearrange the previous equation to
highlight the interaction between saving and
THE SAVING-INVESTMENT GAPTHE SAVING-INVESTMENT GAP
g g g
investment in the domestic economy and the
current account balance
Here we look at the saving-investment approach to the balance of payments
Here we look at the saving-investment approach to the balance of payments
22
GNDI – A = CAB
THE SAVING-INVESTMENT GAPTHE SAVING-INVESTMENT GAP
GNDI – C –I = CAB
S = GNDI – C
S I CABS I CABS – I = CABThe resources needed to cover the excess of
investment over saving must come from abroad
S – I = CABThe resources needed to cover the excess of
investment over saving must come from abroad
EXAMPLE EXAMPLE
23
The saving-investment gap (Sg – Ig) of the government
corresponds broadly to the overall fiscal balance:
THE SAVING-INVESTMENT GAPTHE SAVING-INVESTMENT GAP
government’s disposable income less final
government consumption and investment
Disposable income of the government= revenues and
grants - interest and transfers
The government’s saving-investment gapThe government’s saving-investment gap
The breakdown of gross national income into the
private sector government and the rest of the world
THE SAVING-INVESTMENT GAPTHE SAVING-INVESTMENT GAP
private sector, government and the rest of the world
yields the identity:
CAB = (S – I) = (Sp - Ip) + (Sg – Ig)
Disaggregating the economy-wide saving-investment gapDisaggregating the economy-wide saving-investment gap
24
Sp – Ip > 0
andSp – Ip < 0
and
THE SAVING-INVESTMENT GAPTHE SAVING-INVESTMENT GAP
Sg – Ig < 0
Sp – Ip < 0 Identifying policies that target the source of
Situation 1
Sg – Ig < 0Situation 2
and
Sg – Ig > 0
target the source of the imbalances
Situation 3
A fiscal deficit is the main source of the current
account deficit
THE SAVING-INVESTMENT GAP - SITUATION 1THE SAVING-INVESTMENT GAP - SITUATION 1
Reducing the current account deficit will require
fiscal adjustment
Sp – Ip > 0 and Sg – Ig < 0
CAB < 0 if | Sg – Ig| > | Sp – Ip|
This case involves “twin deficits”This case involves “twin deficits”
25
The current account deficit represents both a government and a private sector deficit
THE SAVING-INVESTMENT GAP - SITUATION 2THE SAVING-INVESTMENT GAP - SITUATION 2
In many developing countries, saving might be Low both in both in the public and private sector,yet considerable investment opportunities exist
Sp Ip < 0 and Sg Ig < 0
Typical of many developing countriesTypical of many developing countries
Sp – Ip < 0 and Sg – Ig < 0CAB < 0
A current account deficit coexists with a fiscal surplus
and a private saving shortfall. The latter may reflect
a private investment boom financed by
THE SAVING-INVESTMENT GAP - SITUATION 3THE SAVING-INVESTMENT GAP - SITUATION 3
a private investment boom financed by
foreign capital inflows
a private consumption boom
a lack of savings opportunities
Sp Ip < 0 and Sg Ig > 0Sp – Ip < 0 and Sg – Ig > 0
CAB < 0 if | Sp – Ip| > | Sg – Ig|
Booming private sector?Booming private sector?
26
(Percent of GDP) 2008 2009 2010
i
EXAMPLE EXAMPLE
Russian Federation
Estimate
Gross domestic investment 25.5 18.9 22.8
Private sector 20.8 14.3 18.4
Public sector 4.7 4.6 4.4
Gross national savings 31.7 22.9 27.6g
Private sector 22.7 24.6 28.8
Public sector 9.0 -1.7 -1.2
External current account balance 6.2 4.1 4.8
Financial LinksFinancial Links
27
A third way to look at the links between
the domestic economy and the external
FOREIGN SAVINGSFOREIGN SAVINGS
the domestic economy and the external
sector is through financial links
Looking at financial flows of the balance of payments
Looking at financial flows of the balance of payments
• A deficit in the current account is matched by a current account surplus of the rest of the world
Th l fl t
S-I = CAB
FOREIGN SAVINGSFOREIGN SAVINGS
• The surplus reflects foreign savings
• Foreign savings finance the deficit country through flows in the capital and financial
CAB+KAB =FAB*+RES
CAB+KABFAB*RES=0
capital and financial account, and changes in reserve assets
(BPM6 sign conventions)
The rest of the world has an excess of saving over investment when its current account is in surplusThe rest of the world has an excess of saving over investment when its current account is in surplus
28
EXAMPLE EXAMPLE
Is the recourse to foreign savings sustainable?
FOREIGN SAVINGSFOREIGN SAVINGS
g g
A country’s recourse to foreign savings can be A country’s recourse to foreign savings can be y g gmaintained only as long as capital inflows
persist or reserve assets decline
y g gmaintained only as long as capital inflows
persist or reserve assets decline
29
Recall that changes in NFA must be consistent with changes in reserves in the balance of payments
Abstracting from changesin NFA of commercial banks andof valuation changes:
THE MONETARY APPROACH TO THE BOPTHE MONETARY APPROACH TO THE BOP
balance of payments
Assuming no changes in OIN:
a difference between domestic credit
∆NFA = ∆RES(in same currency)
domestic credit expansion and the increase in broad money is reflected in a change in reserve assets
∆M2 - ∆NDA= ∆RES
∆M2 - ∆NDA= ∆RES
THE MONETARY APPROACH TO THE BOPTHE MONETARY APPROACH TO THE BOP
This approach is widely used in IMF-
supported programs
This relation constitutes the basis of the monetary approach to the BOP
This relation constitutes the basis of the monetary approach to the BOP
30
Example
THE MONETARY APPROACH TO THE BOPTHE MONETARY APPROACH TO THE BOP
What if credit expansion exceeds increases in M2? What if credit expansion exceeds increases in M2?
FURTHER ASPECTS OF THE MACROFRAMEWORK AND ITS USEFURTHER ASPECTS OF THE MACROFRAMEWORK AND ITS USE
Introduction to flow of funds tables
Data consistency checks
Behavioral consistency
31
Flows of FundsFlows of Funds
The flow of funds table shows both nonfinancial and
financial transactions of each of the domestic sectors
INTRODUCTION TO FLOW OF FUNDS TABLESINTRODUCTION TO FLOW OF FUNDS TABLES
Let us look at a simplified example in the next slide
The savings-investment balance for each sector and for the aggregate economy must be completely
financed
The savings-investment balance for each sector and for the aggregate economy must be completely
financed
32
EXAMPLE (percent of GDP) EXAMPLE (percent of GDP)
Accounting conventions:
In the financial part of the table a positive sign
INTRODUCTION TO FLOW OF FUNDS TABLESINTRODUCTION TO FLOW OF FUNDS TABLES
In the financial part of the table, a positive sign
represents an increase in liabilities (borrowing) or a
decrease in assets (a loss of foreign reserves, for
example). A negative sign means the opposite
Under these sign conventions:For each sector in columns the vertical sum of
operations is zeroThe horizontal sum of each row is zero
Under these sign conventions:For each sector in columns the vertical sum of
operations is zeroThe horizontal sum of each row is zero
33
EXAMPLE (percent of GDP) EXAMPLE (percent of GDP)
EXAMPLE (percent of GDP) EXAMPLE (percent of GDP)
34
Helps identify the origins of the surpluses and deficitsHelps identify the origins of the surpluses and deficits
May be Helpful in Analytical Work
INTRODUCTION TO FLOW OF FUNDS TABLESINTRODUCTION TO FLOW OF FUNDS TABLES
Shows how the surpluses are utilized and the deficits are financed in each sectorShows how the surpluses are utilized and the deficits are financed in each sector
Helps to Ensure the Consistency of the Historical Data Scenarios and Projections
Summarizes the interrelationships among the different sectors in a systematic and coherent waySummarizes the interrelationships among the different sectors in a systematic and coherent way
Data, Scenarios and Projections
More details and examples about flow of funds tables
are available in the optional material of this module
INTRODUCTION TO FLOW OF FUNDS TABLESINTRODUCTION TO FLOW OF FUNDS TABLES
Take the time of studying it!
Optional- more on flow of funds tablesOptional- more on flow of funds tables
35
Balance of Payments (BPM06, US dollars, transactions) Current account (surplus +, deficit -)
• Consistency test: Final government consumption can be reconciled with expenses on “wages and salaries”, “use of goods and services” and some other expenses
41
• Discrepancies may arise from the breakdown of fiscal accounts not showing exactly the two
expenses named above; and fiscal accounts often reported on a cash basis, when the
national accounts are on an accrual basis
From National Accounts(domestic currency, transactions)
…P i t i t t
Fiscal Accounts (GFSM2001, domestic currency,
transactions)RevenuesGrantsExpenses
DATA CONSISTENCY CHECKSDATA CONSISTENCY CHECKS
Private investmentGovernment investment…
…Transactions in nonfinancial assets…• Consistency test: Government investment can be reconciled
with to transactions in nonfinancial assets
41
• Discrepancies may arise from the coverage of the fiscal tables and the use of cash versus accrual accounting.
Note that capital expenditures by public enterprises are considered “private sector investment” in the national accounts
37
From National Accounts (domestic currency, transactions)
Absorption
Exports of goods and nonfactor
DATA CONSISTENCY CHECKSDATA CONSISTENCY CHECKS
• Consistency test: Exports and imports in the national accounts should correspond to
services
Imports of goods and nonfactor servicesBalance of Payments (US dollars, transactions) Current account
Exports of goods and services
exports and imports in the BOP converted to domestic currency
• Discrepancies may occur owing to the Exports of goods and services
Imports of goods and services
Primary income (net)Secondary Income (net)
…
gaverage exchange rates used and other accounting differences
DATA CONSISTENCY CHECKSDATA CONSISTENCY CHECKS• Consistency test: External
financing in the fiscal accounts can be reconciled with “other investment” and “portfolio investment,”
difficult to establish for many reasons, including discrepancies in the valuation of assets due to exchange rate fluctuations
flows)
Net foreign assets
Net domestic assets…
39
DATA CONSISTENCY CHECKSDATA CONSISTENCY CHECKS • Consistency test: Domestic financing from the banking system can be reconciled with “net claims on the government”
Monetary 4/ -40.4 0.0 0.0 -40.4 40.4 0 Change in NFA of commercial banks -72.3 -72.3 72.3 0 Change in NFA of central bank 31.9 31.9 -31.9 0 Net reserve assets -9.6 -9.6 9.6 0 Other net foreign assets 41.5 41.5 -41.5 0
Monetary 4/ -1.7 0.0 0.0 -1.7 1.7 0 Change in NFA of commercial banks -3.1 -3.1 3.1 0
Ch i NFA f t l b k 1 4 1 4 1 4 0 Change in NFA of central bank 1.4 1.4 -1.4 0 Net reserve assets -0.4 -0.4 0.4 0 Other net foreign assets 1.8 1.8 -1.8 0
Net errors and omissions 5/ 1.6 0.0 -4.9 6.5 -1.6 0
Check 0 0 0 0 0 0
Memorandum: 2004 GDP (b illions of pounds, current pri 2,321.0
51
What if the 100 billion increase in government
expenditure is financed by borrowing from the rest of
MORE ON FLOW OF FUNDS TABLESMORE ON FLOW OF FUNDS TABLES
the world?
Remember to make at least four changes in the flow
of funds table for every scenario. You may make
assumptions, when necessary, about the behavior of
economic agents and about the state of the economy
Study examples of scenarios in the Excel file!Study examples of scenarios in the Excel file!
Country ExamplesCountry Examples
52
12/16/2011 10:55 2008 2009 2010
Real economy (percent change)Real gross domestic product 11.7 2.1 2.9
Nominal gross domestic product 30.8 -4.4 22.6
GDP Deflator 16.7 -6.3 19.0
Country A: Main Economic Indicators, 2008–10
The 2009 Exogenous Shock
Consumer prices (annual average) 10.6 11.7 12.3
Central government (percent of GDP)Total revenue 43 29 37
Of which: commodities-related 35 21 28Total expenditure 36 34 31
Current expenditure 24 23 23Capital expenditure 12 11 8
Overall fiscal balance (budget basis) 8 -4 6
Money and credit (end of period, percent change)Broad money (M2) 56.3 53.2 11.2Velocity (GDP/M2) 3.8 2.2 2.5Credit to the economy (12-month percent change) 55.8 50.6 21.2y ( p g )Net international reserves (end of period, billions of U.S. dollars) 14.9 10.7 14.7
Balance of paymentsTrade balance (percent of GDP) 30 15 25